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Supplier Engagement

Apical recognises the importance of establishing a tailored approach to communicating with our broad range of stakeholders. Our commitment to sustainability extends throughout our supply chain.

We engage with suppliers before and after they are integrated into our supply chain because we believe that our sustainability goals cannot be achieved in isolation and require the collaboration of all stakeholders. Suppliers, in particular, are our focus to transforming the industry and ensuring palm oil is produced sustainably.

Priority in engagement is given to long term suppliers or those who sell us large quantities of raw materials. However, smaller suppliers who are willing to adopt more responsible practices are also given equal priority to enter our sustainable supply chain.

For suppliers, we conduct regional workshops that spur discussions on incorporating sustainability and traceability as part of their quality management system.

The engagement process involves visits to the mills and estates to identify areas for improvement needed to adhere to Apical’s Sustainability Policy commitments and global standards. Visiting suppliers directly gives us deeper insight to evaluate current practices and provide support for the implementation of best practices in sustainability.

We record the changes required and action needed for improvement through individual supplier reports. Based on the findings, we develop capacity building strategies to address the remaining issues that appear to be beyond suppliers’ abilities.

Since 2015, we have introduced tailored Anchor Programmes for supplier prioritisation and engagement as well as capacity building through field visits, face-to-face meetings and workshops. As of 2016, Apical engaged with 21 major palm oil suppliers through assessment visits to their mills and plantations.

Potential Suppliers

Apical has a Sourcing Policy with a clear set of criteria of what we consider as responsible sourcing. Potential suppliers are evaluated based on a full review of their company profile and their ability to present official licenses and/or permits that meet legal requirements. All new suppliers must provide information of their sustainability practices as well as the level of traceability within their operations.

Apical’s suppliers are required to comply with our Sustainability and Sourcing policies – we emphasise this within the terms and conditions of our commercial arrangement.

Click here to find out more about our sourcing policy.

Active Suppliers

Once suppliers are contracted into our supply chain, we continue to pro-actively engage with them to monitor policy compliance and facilitate continuous transformation towards sustainability.

Apical shares useful guidelines on topics such as:

We also run the following programmes in partnership with key stakeholders and organisations:

Mill Prioritisation Process (MPP)

The MPP is a risk-based assessment approach to identify priority mills for deeper engagement. This involves the process of analysing geospatial and non-spatial parameters to identify potential sustainability risks associated with supplying mills.

Geospatial parameters identify sustainability risks including fire hotspots, forested areas, reserve areas, peatlands and other environmental risks within a 50 km radius of a supplying mill.

Non-spatial parameters focus on identifying issues related to communities, smallholders and ongoing grievances that may occur in a mill’s supply chain, based on publicly reported information from sources such as the media and external reports. High impact suppliers that have long-term business relations with Apical are usually prioritised for engagement.

Through our partnership with The Forest Trust (TFT), suppliers undergo regular risk analyses and prioritisation assessments to determine which ones we should prioritise and engage with first. TFT helps us conduct spatial analyses as well as evaluations of policies and publicly reported information, checking for gaps and potential issues of a supplier’s ability to comply with our stated commitments.

Priority Supplier Engagement Programme (PSEP)

In the event of a supplier being identified as high risk via the MPP, Apical will enter the supplier into the Priority Supplier Engagement Programme.

The PSEP, which began in 2015, is designed to assess our prioritised suppliers’ level of compliance with Apical’s Sustainability Policy and other relevant industry requirements. The assessment focuses on six key guiding principles:

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Apical has conducted 37 visits to our supply mills in Sari Dumai Sejati and AAJ Marunda and their FFB suppliers as of 2018. The field visits we conduct for these prioritised suppliers allow us to have personal interaction and effective communication for deeper engagement. This facilitates a better understanding of our suppliers and insight into their practices and helps us to identify gaps for improvement.

The most common social issue identified was land conflicts resulting from the lack of Free Prior Informed Consent (FPIC) between the companies and communities and due to the lack of clear land boundaries being defined. From an environmental perspective, most issues we found were centered on water and air pollution from the milling process.

We are in the process of working with the parties involved and providing guidance on developing standard operating procedures and sustainability management systems to the companies. As we find such personal on-ground visits to be highly effective, we will continue this level of engagement with our priority suppliers and closely monitor their implementation of best practise. Apical has scheduled 12 PSEP visits in 2018.

Traceability Outreach Programme (TOP)

Apical has set a target of achieving full traceability to plantation (FFB traceability) by 2020. To date, we have achieved full traceability to mill since 2015 and 64% traceability to plantation as of 2018.

Click here for more information on Apical’s Traceability.

We have implemented traceability programmes as an approach to identify the third-party suppliers of palm oil. This initiative seeks to verify and integrate the data collected to build an interactive mapping platform that assists our suppliers in identifying and managing landscape-level issues based on the location of their FFB source.

TOP is designed to provide knowledge and simplified solutions for suppliers of our refineries on collection and management of their supplying mills’ traceability data.

In 2017, 56 supplying mills were engaged through TOP. We intensified our engagement goals in 2018 and have engaged with 87 mills as of October 2018.

Through TOP, Apical hopes to increase the transparency and traceability of our sources, as well as minimise the possibility of sourcing form suppliers who engage in deforestation, burning and other illegal activities.

Shared Value Programme (SVP)

In partnership with sustainability consultants and subject matter experts The Forest Trust, Intertek, RSPO, Yayasan Setara Jambi, Proforest and Daemeter Consulting, we deliver workshops for suppliers to share practical experience and industrial knowledge on local and regional issues specific to their location as well as current international issues.

SVP trainings and seminars cover market trends such as the benefits of international certifications, challenges in traceability, as well as working frameworks for responsible sourcing. Industry updates to standards and frameworks such as HCS and HCV protection are shared during these sessions and suppliers are also updated on Indonesia’s regulation on peat, mill operations and plantation requirements.

The aim of SVP is to engage suppliers and build their capacity to adopt more sustainable practices. Participants gain insight into the importance of palm oil traceability and responsible sourcing. Aside from presentations by industry experts and partners, this programme promotes active discussions in which suppliers take ownership of some solutions.

Since the launch of this programme in 2015, we have conducted eight workshops with another one scheduled for December 2018, engaging over 200 companies in Jakarta, Pekanbaru and Medan.

Through the SVP, Apical hopes to be a driving force and enabler of industry-wide transformation by increasing the level of awareness, disseminating global best practices, and providing a platform for industry sharing and collaboration.

Problematic Suppliers

Apical does not knowingly source from problematic suppliers such as those that engage in illegal activities or violate community rights. We have established the Apical Grievance Procedure – a formal process to address grievances – for our stakeholders to raise concerns related to our business or suppliers. This process aims to ensure we are informed and able to investigate any issues raised in a transparent and accountable manner.

For any issue raised against a supplier, the process is to clarify any alleged violations against our sustainability policy within a fixed period. Once a grievance has been raised officially, we publicly share timely updates of our correspondence with the affected parties and the progress of resolution.

The Apical Grievance procedure covers all these activities: recording of grievance; verifying claims; rectifying confirmed claims; reporting the results and actions taken; and delivering official responses to stakeholders whilst monitoring and managing follow-up actions.

For any proven violations, suppliers are required to provide a concrete corrective action plan with clear timelines. Failure to respond and commit towards remedial action triggers a suspension of contracts until progress has been made or the issue has been resolved.

Apical reserves the right to cease transactions with all suppliers who have repeatedly violated our sustainability commitments.

Click here for more information on the Apical Grievance Procedure.

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